By Mike Bodeen · 7 August 2023
Slight Summer Price Drop
They’re saying that July 2023 was the worst (hottest) on record, but it’s August in the Valley of the Sun, that is the pinnacle of misery. September, though still hot, brings cooler mornings and is a reminder that soon, our chamber of commerce weather will return.
Our Phoenix metro residential real estate market is resembling our August weather slog. Low supply, low demand, and high mortgage rates (7+%), yet still, a seller’s market. Still not much of a break for buyers.
August 1st Market Report
Arizona Regional MLS numbers for August 1, 2023, vs with August 1, 2022 – areas & types:
Active Listings 11,241 vs 17,957 last year – down 37% – and down 2.6% from 11,545 last month
Under Contract Listings: 7,546 vs 8,058 last year – down 6.4% – and down 4.0% from 7,858 last month
Monthly Sales: 5,906 vs 6,190 last year – down 4.6% – and down 21% from 7,452 last month
Monthly Average Sales Price per Sq. Ft: $282 versus $286 last year – down 1.3% – and down 1.9% from $287.78 last month
Monthly Median Sales Price: $434,900 vs $452,500 last year – down 3.9% – and down 1.8% from $443,000 last month
Cromford reports: So far in the third quarter of 2023 we have seen 7,447 new listings. The equivalent number last year was 12,439 and in 2021 it was 11,712. We are down 40% from last year and down 36% from 2021. This annual drop in new supply is unprecedented and is having a far bigger impact on the market than the affordability issues caused by the high interest rates. With the Cromford® Market Index near 160, we have a seller’s market where overall pressure on prices is up not down, despite the lack of enthusiasm on both sides of the negotiation.
On a different note, the new home market is doing much better than resales:
New home closings totaled 1,352 with a median sales price of $533,592, an all-time record high price
The new home closed sales count was up 7.6% from July 2022 but down 18.4% from June 2023.
The new home median sales price is up 3.2% from a year ago, and up 2.8% from last month
One of the reasons why new home sales are fairing better than resales is that builders are providing mortgage rate buy-downs. Resale sellers can do the same, and those sellers that are providing incentives for buyers are more successful in getting to – CLOSED!
The three side-by-side certified “passive houses”—meaning they meet the standards set by the Passive House Institute in Darmstadt, Germany—use airtight construction, triple-glazed windows, a foundation made from 12-inch concrete slabs set on 8-inch foam blocks, and strategic shading to bypass conventional heating and cooling systems. One of the homeowners, Amod Athavale, says his house has remained at 72 to 75 degrees with only a few hours of air conditioning each day, despite the triple-digit heat that hit the city this summer. He says his electricity bill currently has a negative balance of about $1,000, meaning the electric company owes him. WSJ 08-04-2023
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Market data referenced in this article comes from The Cromford Report.